Britain's growing appetite for pub grub has failed to save Birmingham- based pubs group Mitchells & Butlers from the "significant impact" of the London bombings.

The owner of 2,000 pubs in prime locations nationwide, which has its headquarters in Fleet Street, Birmingham, yesterday said that in the 11 weeks since the bombings, sales growth in central London was 2.2 per cent, compared to the 7.6 per cent growth trend seen in the 40 weeks prior to the attacks.

Chief executive Tim Clarke said that Nicholson Inn and All Bar One outlets in central London had been particularly affected.

"Confidence is still very fragile - consumer spending continues to weaken," he added.

"We think there are some modest signs of recovery, but clearly it's not every week that England win the Ashes and we have an Indian summer."

Many other leisure groups have blamed weakness on the high street on the four bombers who killed themselves and 52 other people on July 7, and on attempted bombings two weeks later.

However, away from London, which accounts for around 15 per cent of M&B group sales, the picture was much brighter.

Average sales per managed pub increased to £16,400 a week, a figure the company described as three times the industry average and a rise of eight per cent in the year.

Pubs in the residential estate, including Ember Inns, Harvester, Sizzling Pub Co, Toby and Pub Carveries, achieved growth in same outlet sales of 5.7 per cent in the 19 weeks to September 17 - in line with the rate achieved for the whole year.

The residential estate accounts for around 70 per cent of M&B's pubs.

And despite greater competitive pressures, the company said its high street outlets continued to perform well, with sales up three per cent in the 19 weeks and by 3.3 per cent in the 51 weeks to September 17.

" Our Harvester, Toby, Ember Inns and Sizzling Pub outlets did well and it's pleasing to note that overall food growth was up by ten per cent in the period," Mr Clarke said, adding that M&B was now selling 75 million pub meals a year.

"Cash-rich, time-poor Britain is looking to the convenience and the quality of pub food more and more.

"But when you take into the account the knock that happened to our central London sales, the bulk of which are high street, you can see just how strongly our high street business is performing against a difficult market."

In its trading update, M&B warned that costs looked very challenging for the next 12 months.

"Energy costs have risen sharply in the past few months and, combined with higher regulatory costs, we expect to incur external cost increases next year in the range of £23 million to £27 million," it added.

But it also said operating profit for the year to October 1 2005 was expected to come in at the top end of analysts' expectations, which range from £ 282 million to £297 million. Profit before tax is expected to fall between £179 million and £190 million.

M&B and fellow pubs group Punch Taverns are thought to be eyeing the 2,000-strong pubs chain with a view to a joint break-up.

Spirit Group confirmed that it had received an approach which could value the company at about £3 billion.

"We're watching the situation, but I've got nothing specific to say," Mr Clarke said. "However, we're always interested in pub assets that would add value to our estate and brands and if something comes along then we'll look at it."

Recent reports have suggested private equity outfit Alchemy Partners is close to a deal.